July 21, 2015 

Submitted Electronically – e-ORI@dol.gov and e-OED@dol.gov 

Office of Regulations and Interpretations 

Office of Exemption Determinations 

Employee Benefits Security Administration 

U.S. Department of Labor 

200 Constitution Ave., NW 

Washington, DC 20210 

Re: Definition of the Term “Fiduciary” (RIN 1210-AB32); 

Best Interest Contract Exemption (ZRIN 1210-ZA25) 

Ladies and Gentlemen: 

RREEF Property Trust, Inc. (“RPT”) submits the following comments regarding the rule 

proposed by the U.S. Department of Labor (the “Department”) which would redefine who is a 

“fiduciary” by reason of providing investment advice for a fee or other compensation (the 

“Proposed Rule”) and the related proposed Best Interest Contract Exemption (the “BIC 

Exemption”).1 

RPT supports the Department’s goal of ensuring that financial advisors put the best 

interests of retirement plans, plan participants and IRA owners first. However, RPT has a number 

of specific concerns about the negative effect the Proposed Rule and the BIC Exemption would 

have on the availability of quality investments, like publicly registered, non-listed real estate 

investment trusts (“Non-Listed REITs”), used by IRA owners and participants to diversify their 

retirement portfolios. 

I. About RREEF Property Trust, Inc. 

RPT is sponsored and externally managed by RREEF America, LLC (“RREEF 

America”). RREEF America has been acquiring and managing real estate investments in the 

United States on behalf of institutional investors since 1975. RREEF America, together with its 

affiliates in Europe and Asia, comprise the global real estate investment business of Deutsche 

Asset & Wealth Management (“Deutsche AWM”), a division of Deutsche Bank, A.G. As part of 

the Alternatives and Real Assets platform, Deutsche AWM’s real estate investment business is 

one of the largest real estate investment managers in the world with more than 405 professionals 

and staff located in 22 cities worldwide. The global business offers a diverse range of risk return 

and geographic real estate strategies, including stabilized, value-add and high yield properties and 

 

1

See Proposed Conflict of Interest Rule, 80 Fed. Reg. 21960 (proposed Apr. 20, 2015 (to be codified at 29 

C.F.R. pt. 2550); and Proposed Best Interest Contract Exemption, 80 Fed. Reg. 21960 (proposed Apr. 20, 2015 (to be 

codified at 29 C.F.R. pt. 2550). 
2 

investments in real estate-related assets on behalf of its approximately 483 institutional clients, 

including public and corporate pensions, foundations and labor union plans. Regional research 

teams are complemented by locally focused investment and asset managers that provide 

proprietary perspectives on market opportunities, trends and risks. RREEF America combines 

this market intelligence with sophisticated portfolio construction and risk management in order to 

achieve superior long-term risk adjusted returns, preservation of capital and diversification for its 

clients. As of March 31, 2015, on a global basis, Deutsche AWM had approximately 

$1.25 trillion in total assets under management, including approximately $40.2 billion of 

properties and $10.0 billion of real estate securities. Within the United States, Deutsche AWM 

had $16.5 billion of properties and $7.9 billion of real estate securities under management as of 

March 31, 2015. 

RPT, a Maryland corporation, was formed as a Non-Listed REIT in order to invest in (1) 

a diversified portfolio of high quality, income-producing commercial real estate located 

throughout the United States, including office, industrial, retail and multifamily properties, (2) 

common and preferred stock of exchange-listed REITs and other real estate companies and (3) 

debt backed principally by real estate. RPT is structured as a “perpetual-life” Non-Listed REIT, 

which means that subject to regulatory approval of its filings for additional offerings, RPT will 

sell shares of its common stock on a continuous basis and for an indefinite period of time. In 

addition, RPT sells its shares at a price based on the net asset value (“NAV”) of its underlying 

assets, calculated daily by an independent fund administration provider. RPT distributes its 

shares of common stock to the public through broker-dealers that are members of the Financial 

Industry Regulatory Authority, Inc. (“FINRA”). RPT offers to the public two classes of shares of 

its common stock, Class A shares and Class B shares. The difference between the share classes 

relates to selling commissions and ongoing fees and expenses: no selling commissions or 

distribution fees are paid with respect to Class B shares. Also, while Class A shares are available 

to the general public, Class B shares are available for purchase only under certain circumstances.2

Although its common stock is not listed for trading on a stock market or other trading exchange, 

RPT provides its investors with limited liquidity through a redemption plan that permits investors 

to request redemption of all or a portion of their shares on any business day at the daily NAV per 

share. 

From inception of capital raising on January 3, 2013 through March 31, 2015, RPT has 

raised approximately $56,000,000 in equity capital from over 400 investors, with approximately 

10% invested through employer-sponsored retirement plans and individual retirement accounts 

(“IRA”) subject to the Employee Retirement Income Security Act of 1974 (“ERISA”) and/or the 

Internal Revenue Code (“Code”). Since inception, RPT has made distributions to investors 

aggregating approximately $3,000,000, at an average rate of 5.0% based on the gross purchase 

price per share of the common stock. To date, 100% of the redemption requests made by 

investors in RPT have been satisfied. 

 

2

 RPT’s Class B shares are available for purchase only (1) through fee-based programs, also known 

as wrap accounts, of investment dealers, (2) through participating broker-dealers that have alternative fee 

arrangements with their clients, (3) through certain registered investment advisers, (4) through bank trust 

departments or any other organization or person authorized to act in a fiduciary capacity for its clients or 

customers, (5) by endowments, foundations, pension funds and other institutional investors or (6) by RPT’s 

executive officers and directors and their immediate family members, as well as officers and employees of 

RPT’s advisor, sponsor or other affiliates and their immediate family members, and, if approved by RPT’s 

board of directors, joint venture partners, consultants and other service providers. 
3 

RPT is a member of the Investment Program Association (“IPA”) and the National 

Association of Real Estate Investment Trusts (“NAREIT”) and concurs with (i) the comment 

letter submitted to the Department by the IPA with respect to Non-Listed REITs (the “IPA 

Letter”), and (ii) the comment letter submitted to the Department by NAREIT’s Public NonListed REIT Council. RPT writes separately to highlight particular concerns with the scope of 

the Proposed Rule and the proposed BIC Exemption as they relate specifically to Non-Listed 

REITs that sell and redeem shares daily based on their NAV (“Daily NAV REITs”). 

II. The Investment Advice Regulation Should Not be Revised. 

The existing regulation governing when a person shall be deemed to be rendering 

investment advice to an employee benefit plan within the meaning of § 3(21)(A)(ii) of ERISA 

was issued by the Department in 1975, and has been in effect continuously ever since. Congress 

has amended ERISA multiple times since 1974, but has never expressed any dissatisfaction with 

the current regulation. When Congress has regulated the provision of investment advice, it has 

done so through amendments to the securities laws, which uniformly apply to all investors, not 

just those investing through retirement plans. There is no evidence that Congress intends a 

dramatic expansion of regulation governing investment advisers through ERISA and the Code. 

Further, economic expectations have settled around this 40 year old rule. The Proposed 

Rule would create significant regulatory compliance concerns and uncertainty where none has 

existed before. In light of the longevity of the rule, and the resulting economic structure 

developed over the past 40 years, the Department should not undertake such a dramatic change 

absent Congressional action. 

Additionally, the existing regulation provides certainty in several important ways. For 

example, the existing rule requires that there be a mutual understanding that advice will serve as a 

primary basis for investment decisions and will be individualized to the plan. The Proposed Rule 

sweeps much more broadly, and does not include the mutuality, primary basis or 

individualization requirements. Those attributes give the existing regulation far more certainty as 

to when advisors act in a fiduciary capacity for purposes of ERISA and/or the Code. 

It is likely that eliminating this certainty will result in extensive (and expensive) 

litigation, which will ultimately increase costs for investors, and create conflict with other 

regulatory schemes. For example, the provision of investment advice by registered investment 

advisers is already comprehensively regulated by the Investment Advisers Act of 1940 (the 

“Advisers Act”), and related regulations, which imposes a fiduciary duty on such investment 

advisers. It is unclear if this duty is the same as the fiduciary duty that would exist under ERISA 

and the Code if the Proposed Regulation is adopted. If so, what is the point of additional 

regulation? If it is different, the Proposed Rule does not make clear how the duties are different. 

The proposal simply does not address this issue (other than to conclude, without discussion, that 

existing regulations are not sufficient). Similarly, for advisers whose only option for a prohibited 

transaction exemption is the BIC Exemption, like broker-dealers who work on a commission 

basis, it is unclear whether the obligations created by best interest contracts differ from fiduciary 

obligations created under ERISA and the Code. If they are different, the Proposed Rule does not 

make clear if the new obligations and/or available remedies are different. The courts will be left 

to wrestle with these issues in piecemeal and costly litigation over the course of several years. 

A better approach would be to leave the long-standing rules unchanged, or make more 

limited modifications that would be less of a departure from well-settled practices. In particular, 

the mutual agreement, primary basis and individualized advice requirements should be retained. 
4 

III. The BIC Exemption Should be Modified. 

A. The Department Should Reject the Concept of a Legal List. 

As discussed in the IPA Letter, given the dynamics of the marketplace, it is unwise to 

attempt to freeze in time a list of investment products eligible for prohibited transaction 

exemptions. Attempts to require trustees to select investments from a statutory list of investments 

(“legal lists”) have not been successful. Prior to the Great Depression, many states had such 

requirements, but experience has highlighted the advantages of a more flexible approach. Indeed, 

this history led the drafters of Restatement (Third) of Trusts to conclude that “[k]nowledge, 

practices, and experience in the modern investment world have demonstrated that arbitrary 

restrictions on trust investments are unwarranted and often counterproductive.”3 

The Department itself has previously recognized that it is not appropriate “to include in 

the regulation any list of investments, classes of investment, or investment techniques that might 

be permissive under the ‘prudence’ rule. No such list could be complete; moreover, the 

Department does not intend to create or suggest a ‘legal list’ of investments for plan fiduciaries.” 4 

In the preamble to the proposed BIC Exemption, the Department emphasized that it intended to 

adopt a “principles-based” or “standards-based” approach that “would flexibly accommodate a 

wide range of current business practices” while minimizing conflicts of interest.5 

The benefits of flexibility, and an unconstrained fiduciary standard, would be best 

obtained by an open set of assets eligible for the BIC Exemption. The BIC Exemption itself 

should cover advice with respect to “any securities” as long as the advice would otherwise satisfy 

the best interest standards of the BIC Exemption. 

B. The Set of Assets Eligible for the BIC Exemption Should 

Include Non-Listed REITs. 

If the Department determines to utilize a list of investments eligible for the BIC 

Exemption, the definition of “Assets” in such exemption should be expanded to include NonListed REITs, including Daily NAV REITs like RPT. First, as discussed extensively in the IPA 

letter, Non-Listed REITs are already subject to extensive federal and state regulations that are 

sufficiently protective of investor interests as to warrant inclusion as Assets eligible for the BIC 

Exemption. Moreover, Non-Listed REITs have a number of favorable attributes that make them 

appropriate for inclusion in a well-diversified retirement portfolio. 

1. Non-Listed REITs are Adequately Regulated. 

REITs were created by Congress through the enactment of the Real Estate Investment 

Trust Act in 1960. Non-Listed REITs are subject to the same IRS requirements as exchangelisted REITs, including the requirement that they distribute at least 90% of taxable income to 

shareholders annually. Also, like exchange-listed REITs, offers and sales of interests in Non-

 

3 Restatement (Third) of Trusts, Ch. 17, Investment of Trust Funds (Introductory Note, Edward C. Halbach, 

Jr., Reporter); See, also, Jeffrey N. Gordon, The Puzzling Persistence of the Constrained Prudent Man Rule, 62 

N.Y.U.L. REV. 52 (1987). 

4

 44 Fed.Reg. 31639 (June 1, 1976). 

5

Proposed BIC Exemption, at 21961. 
5 

Listed REITs are registered with the SEC under the U.S. Securities Act of 1933, as amended (the 

“1933 Act”). In addition, like exchange-listed REITs, Non-Listed REITs must file with the SEC 

(and make publicly available) periodic and current reports, such as Forms 10-Q, 10-K and 8-K, as 

well as proxy statements filed pursuant to the U.S. Securities Exchange Act of 1934, as amended 

(the “1934 Act”). The primary difference between the regulation of exchange-listed and NonListed REITs is that exchange-listed REITs are subject to the corporate governance and other 

requirements of the stock exchanges and Non-Listed REITs are subject to the corporate 

governance and other requirements imposed by state securities regulators, which generally follow 

the North American Securities Administrators Association (“NASAA”)’s Statement of Policy 

Regarding Real Estate Investment Trusts (the “NASAA REIT Guidelines”).6 Non-Listed REITs 

become subject to the NASAA REIT Guidelines because in order to offer and sell their interests 

to the public, they must register and be approved for sale by the state securities divisions of each 

of the states and U.S. territories in which offers and sales of the interests will be made. 

The state specific regulations to which Non-Listed REITs are subject provide significant 

additional protection to investors that are not applicable to securities offerings of exchange-listed 

companies. For example, like exchange-listed REITs, Non-Listed REITs must have boards of 

directors that are comprised of a majority of independent directors and those boards act in a 

fiduciary capacity with respect to stockholders.7 Non-Listed REITs are subject to additional 

fiduciary requirements including an express fiduciary duty of the external manager to the REIT 

and its stockholders, and an additional fiduciary duty of the independent directors to stockholders 

to supervise the relationship of the Non-Listed REIT with its external manager. The approval of 

a majority of the independent directors is required on many matters including changes to the NonListed REIT’s investment policies, related party transactions, the compensation paid to the 

REIT’s external manager and the annual renewal of its management agreement. Further, the 

NASAA REIT Guidelines impose significant limitations on the types of investments a REIT can 

make, the fees and expenses it can pay, the level of its borrowings and the indemnification it can 

provide its directors and external manager, among others.8 

As an additional layer of investor protection, approximately 40 states apply a “merit 

review” approach to the registration of Non-Listed REIT securities offerings. These states, in 

reviewing a registration statement for a securities offering, will make a determination regarding 

the fairness of the offering to investors. If an offering is considered unfair in certain respects, the 

states will issue comments with respect to the substance of the offering. If a state securities 

regulator is not satisfied with the “fairness” of an offering, the regulator can refuse to declare the 

registration statement effective in that state. There are varying degrees of merit regulation, with 

some states applying stricter standards than other states. 

Moreover, the primary channel used to distribute Non-Listed REITs is through brokerdealers that are registered with the SEC, FINRA, and the relevant state securities regulatory 

authorities. Federal law and FINRA rules require brokers to “adhere to high standards of conduct 

 

6

 See http://www.nasaa.org/wp-content/uploads/2011/07/g-REITS.pdf. 

7

 See e.g., NASAA’s Statement of Policy Regarding Real Estate Investment Trusts at Section I.B.14; available 

at: http://www.nasaa.org/wp-content/uploads/2011/07/g-REITS.pdf. NASAA defines an independent director (or, in 

the context of a Non-Listed REIT that is in the form of a trust, an independent trustee) as: persons “who are not 

associated and have not been associated within the last two years, directly or indirectly, with the sponsor or advisor of 

the [Non-Listed] REIT.”

8

 Id. at Section II.D and E. 
6 

in their interactions with investors.”9 The suitability requirements of FINRA Rule 2111 and the 

FINRA Rule 2310(b)(2)10 mandate that broker-dealers have a reasonable basis to believe that a 

recommended investment in Non-Listed REIT securities is suitable for each customer based on 

reasonable diligence11 into the investor’s investment profile. In addition, state securities laws 

impose their own suitability standards and income and net worth requirements. The sponsor of a 

Non-Listed REIT, and those selling shares on its behalf, including participating broker-dealers 

and registered investment advisers recommending the purchase of such shares, must make every 

reasonable effort to determine that the purchase of shares in a particular offering is a suitable and 

appropriate investment for each investor based on information provided by the investor regarding 

the investor’s financial situation and investment objectives. 

Broker-dealers offering investments in Non-Listed REITs are also subject to additional 

product-specific disclosure requirements pursuant to FINRA Rule 2310. Prior to investing, 

Section (b)(3) of the Rule requires “that all material facts are adequately and accurately disclosed 

[to offerees] and provide a basis for evaluating the program.”12 In determining the adequacy of 

disclosure, FINRA sets minimum guidelines for broker-dealers, such as: “(i) items of 

compensation; (ii) physical properties; (iii) tax aspects; (iv) financial stability and experience of 

the sponsor; (v) the program’s conflict and risk factors; and (vi) appraisals and other pertinent 

reports.13 FINRA has also recently enacted new rules governing the customer account statements, 

requiring that Non-Listed REITs perform and report share values based on property valuations 

more quickly than was previously required.14

Thus, Non-Listed REITs are subject to extensive federal and state regulation, and the 

broker-dealers and investment advisers who offer these products to their clients are also heavily 

regulated, and already have a duty to their customers to ensure investment suitability. If the 

Department is going to add regulatory oversight under ERISA and the Code when these products 

are sold to retirement plans, it should at least permit these products access to the BIC Exemption. 

Doing so would provide investors the full panoply of protections available under the Proposed 

Rule and the BIC Exemption, as well as the existing securities law protections. Providing 

retirement plan investors effective access to Non-Listed REITs will provide such investors with 

more diversification options, as well as adequate protections, disclosure and oversight. 

 

9

See, e.g., Securities and Exchange Commission, Study on Investment Advisers and Broker–Dealers at 13 

(Jan. 2011), available at: http://sec.gov/news/studies/2011/913studyfinal.pdf. 

10 Investment advisers, whether or not they are registered, are subject to their own fiduciary duty standards. 

See, e.g., FINRA Rule 2111 and FINRA Regulatory Notice 11-02, available at: 

http://finra.complinet.com/en/display/display_viewall.html?rbid=2403&element_id=9859&print=1. 

11 For example, broker-dealers have a duty to “to conduct reasonable investigation of securities, including those 

sold in a Regulation D offering. See, e.g., FINRA Regulatory Notice 10-22, available at: 

http://www.finra.org/industry/notices/10-22. 

12 See, e.g., Disclosures for Direct Participation Programs, which includes REITs discussed herein, Section 

(b)(3)(A) of FINRA Rule 2310, available at: 

http://finra.complinet.com/en/display/display_main.html?rbid=2403&element_id=8469. 

13 See, e.g., Disclosures, Section (b)(3)(B)(i)-(vi) of FINRA Rule 2310. 

14 See FINRA Regulatory Notice 15-02, available at: https://www.finra.org/industry/notices/15-02
7 

2. Non-Listed REITs are Appropriate Investments for Retirement Plans. 

As adequately described in the IPA Letter, Non-Listed REITs, especially Daily NAV 

REITs, are transparent, widely held investments that have a strong performance history, relatively 

low volatility and significant diversification advantages. 

Also as described in the IPA Letter, Non-Listed REITs have shown a lower correlation to 

public equity markets than listed REITs, and, as a result, Non-Listed REITs provide even better 

diversification against market swings. The fact that a particular REIT is not listed on a securities 

exchange also provides a degree of protection against adverse market sentiment. Because they 

are not exposed to equity market fluctuations, Non-Listed REITs are typically less volatile than 

exchange-listed REITs. 

Listed REITs provide greater liquidity than Non-Listed REITs, but that comes at a price 

of greater volatility. Non-Listed REITs have liquidity constraints, but are subject to less 

volatility. Neither is necessarily superior, but each may have its own role in a diversified 

portfolio, and a reasonable investor may choose to hedge by having exposure to both approaches. 

Non-Listed REITs typically have provisions that permit redemptions subject to certain 

limitations prior to the date the Non-Listed REIT provides full liquidity to investors upon the 

consummation of a liquidity event (such as a stock exchange listing, sale or merger with an 

exchange listed company). In addition, retirement plan investments are typically long-term 

investments in which immediate liquidity needs are generally limited. Some liquidity constraints 

in a diversified retirement plan portfolio would be expected as a function of the nature of the 

underlying assets. 

Direct investments in real estate assets can also provide a superior hedge against inflation 

and rising interest rates compared to most fixed income investments which do not provide for any 

potential appreciation of the capital invested. Inflation is a significant risk to retirement income 

and the purchasing power of saving. Unlike bond and fixed income portfolios where the 

purchasing power of invested capital can be eroded by inflation, asset-based direct investments, 

like Non-Listed REITs, can provide capital protection through appreciation of value of the assets 

induced by inflation. Accordingly, direct investments in real estate have been a fundamental 

component of the investment portfolios of institutional pension plans and endowments for years. 

A balanced retirement portfolio would likely include a mix of highly liquid and 

somewhat illiquid assets. Excluding Non-Listed REITs from the BIC Exemption altogether thus 

limits the diversification, inflation hedging and income options available to retirement plan 

investors that research and analysis has proven enhances overall returns as well as reduces risk. 

The Department should include Non-Listed REITs as Assets eligible for the BIC Exemption and 

thus retain these important investment strategies that are currently available and widely used by 

the public for prudent retirement investing. 

C. Daily NAV REITs Provide Additional Protections and Benefits to Investors 

and Should Be Specifically Included in the BIC Exemption. 

If the Department is not persuaded to include all Non-Listed REITs as Assets eligible for 

the BIC Exemption, then at very least, Daily NAV REITs should be deemed eligible for the BIC 

Exemption. Beginning approximately four years ago, Daily NAV REITs were created on the 

belief that the Non-Listed REIT industry needed to provide more investor-friendly direct real 

estate investment products for investors seeking to diversify their investment portfolios in a cost-
8 

efficient manner and with greater liquidity. The efforts of the Daily NAV REITs in existence 

today, combined with recent rule changes from FINRA, are now generating momentum toward 

the creation of even more investor-friendly Non-Listed REIT products. 

The Daily NAV REIT structure allows for additional protections and benefits to investors 

that are unavailable to investors in traditional Non-Listed REITs, including greater transparency, 

lower fees, and increased liquidity. For example, as a perpetual-life Daily NAV REIT, the shares 

of RPT common stock offered to public investors on a continuous basis are priced daily and 

stockholders are able to request redemption of their shares daily. As a result, RPT, like other 

Daily NAV REITs, offers improved liquidity and price-transparency over traditional Non-Listed 

REITs, while still minimizing market-driven volatility that is unrelated to the value of its real 

estate investments in its NAV calculation. In order to provide these significant benefits to 

investors, RPT has designed its fee structure to facilitate these goals, while still complying with 

applicable law and offering appropriate investor protections. Such fee structures are not without 

precedent in the industry; they are similar to the typical fee structures of financial products 

offered by registered investment companies, such as mutual funds, with multiple classes of 

common stock. As a perpetual-life entity, RPT’s investment strategy is not restricted by the need 

to provide liquidity through a single terminal “liquidity event.” RPT believes that its targeted 

portfolio allocation to publicly traded real estate equity securities and other liquid assets will 

permit, under normal market conditions, satisfaction of daily redemption requests under its share 

redemption plan, and therefore enable its stockholders to obtain liquidity for their investment in 

RPT at the time of their choosing. To date, 100% of the redemption requests made by investors 

in RPT have been satisfied. 

Unlike traditional Non-Listed REITs that are required to effect a liquidity event, such as a 

sale of assets or listing of the shares on a national securities exchange, years after their offering 

phase is completed, Daily NAV REITs, such as RPT, continually engage in public offerings and 

expect that their stockholders will hold their shares for indefinite, and widely varying, periods of 

time. Daily NAV REITs allow investors to redeem shares on a daily basis at the current NAV per 

share. In contrast, traditional Non-Listed REITs offer redemption only quarterly and at a discount 

to the original per share purchase price. Generally, Daily NAV REITs can repurchase up to 5% 

of the combined NAV of all classes of shares outstanding at the end of each calendar quarter, 

which means that the issuer can repurchase up to 20% of its total NAV in a calendar year, 

compared to the limitation of 5% of outstanding shares typically imposed by traditional NonListed REITs. 

Daily NAV REITs have designed fee structures to provide compensation for the ongoing 

services provided to the RPT stockholders by the registered representatives of the participating 

broker-dealers in connection with their perpetual-life structure. This is in contrast to the relatively 

illiquid, finite life Non-Listed REITs in which investors are not intended to consider liquidity or 

redemption of shares during the term of the REIT, except for unforeseen circumstances such as 

death or disability. Therefore, in order for a financial advisor to advise on or recommend a 

perpetual life Daily NAV REIT, the financial advisor must monitor and advise the client of the 

optimal time for that particular investor to seek liquidity through the Daily NAV REIT’s share 

redemption plan. Daily NAV REITs generate a return for their investors through both regular 

(i.e., monthly or quarterly) distributions and appreciation in NAV of the shares over the investor’s 

holding period rather than an ultimate liquidity event by giving investors the flexibility to 

liquidate the investment at the appropriate time for each individual investor through an expanded 

share repurchase program. 
9 

Moreover, as a result of Daily NAV REITs’ enhanced liquidity features and perpetuallife structure, Daily NAV REITs are able to charge substantially lower or non-existent up-front 

fees, which enables stockholders with relatively shorter holding periods to redeem their shares 

without incurring a loss equivalent to the amount of up-front fees charged by traditional NonListed REITs. Generally, Daily NAV REITs incorporate fees on a daily basis into the NAV, 

which means that fees paid by the REIT before a new investor purchases shares or before an 

existing investor redeems shares are reflected in the NAV for each class of the issuer’s common 

stock as of the purchase date. Thus, investors incur expenses only for the period of time during 

which they hold their shares and are utilizing the ongoing services of the registered 

representatives of the participating broker-dealers. Due to the lower up-front selling fees charged 

by Daily NAV REITs, a greater percentage of offering proceeds are immediately available for 

investment, which should enable the issuer to generate higher returns for investors by providing 

greater initial investment capital to more fully diversify its investments. The fees to the external 

manager are also generally lower in Daily NAV REITs than traditional Non-Listed REITs 

because (i) fees are paid on NAV instead of gross asset value, (ii) fees are usually a single 

advisory fee with an annual performance component and (iii) many Daily NAV REITs do not 

charge transaction-based fees such as acquisition fees, disposition fees, property management 

oversight fees or debt financing fees. 

Daily NAV REITs provide increased transparency through the use of third party 

valuation experts for the appraised value of their property portfolios. In addition, several Daily 

NAV REITs have engaged a third-party fund administrator that aggregates and publishes the 

REIT’s NAV per share each business day. Furthermore, NASDAQ has granted ticker symbols to 

many Daily NAV REITs, which provides further transparency and price reporting to financial 

advisors and their clients. 

Because Daily NAV REITs offer increased transparency, lower costs, and greater 

liquidity compared to traditional Non-Listed REITs, they are particularly appropriate for 

inclusion in a list of assets eligible for the BIC Exemption in the event the Department determines 

such a list is prudent.

IV. Conclusion. 

For the reasons discussed above, the existing regulations, combined with other 

regulations governing the provision of investment advice is sufficient for the protection of 

retirement investors. However, if the Department determines to adopt the Proposed Rule, RPT 

believes that the BIC Exemption should be modified to eliminate any legal list of investment 

options. Finally, if the Department determines to maintain such a list, RPT believes that it should 

be modified to include Non-Listed REITs, and in particular, Daily NAV REITs. 

Sincerely, 

RREEF PROPERTY TRUST, INC. 

James N. Carbone 

Chief Executive Officer and Director